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USGC ethane spikes to five-month high on freeze-offs, cracker anticipation

Houston — US Gulf Coast ethane climbed to a five-month high Thursday as market sources pointed to gas plant freeze offs last week, gains in natural gas and anticipation of cracker startups.

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January non-LST ethane rose 87.5 points to 28 cents/gal, its highest assessed value since August 21.

Ethane prices have climbed almost 5 cents in two weeks.

"Traders just seem paranoid they might get caught short when [new crackers startup]," a market source said. "I think they're getting out ahead of themselves again."



Natural gas futures spiked 17.8 cents on a record inventory draw to settle at $3.084/MMBtu, for an ethane premium of $1.12/MMBtu, or 7.4 cents/gal.

The frac spread has climbed from a low of 17 cents/MMBtu in December, when sources said more ethane was being left in the natural gas stream.

A trader Wednesday said production had started to normalize after gas plant freeze offs last week but the possibility of another cold front was making some market players "nervous."

Elsewhere in NGLs, propane rose 1 cent to 89.75 cents/gal, but maintained its value at 59% of crude futures.

Prices fell sharply Wednesday despite a 6.3 million barrel draw on weak Asian fixed price demand, another source said.

Butane rose 1.375 cents to 98.50 cents/gal, or an 85-cent discount to RBOB futures.

Non-Targa natural gasoline fell 25 points to $1.4225/gal based on trade at that level in the S&P Global Platts Market on Close assessment process.

Lone Star and Targa barrels were heard at a 75-point discount to non-Targa, narrowing from a 1.25-cent discount on Wednesday.

"A $3/b drop in Belvieu C5 cracks will do that," a source said.

The non-Targa natural gasoline crack versus front-month NYMEX WTI fell to minus $4/b from nearly flat to start the year.

--Andrea Salazar, andrea.salazar@spglobal.com
--Edited by Derek Sands, derek.sands@spglobal.com